Express Scripts' 2011 Drug Trend Report predicts negative trend growth in 2012

Coming just after (but not affected by) the Express Scripts-Medco merger approval, this year’s Express Scripts Drug Trend Report finds that the overall trend (i.e., cost of pharmacy among the member plans of the PBM, or “per member per year” cost) was 2.7% in 2011, the “lowest percentage observed since Express Scripts began tracking trend.” In a forecast section, the company predicts that the 2012 trend will actually go negative, to -0.9%, and then gradually resume growing in 2013 and 2014. Within the overall trend, specialty pharmaceuticals (not defined in the report, but including high-cost, chronic-care drugs) is growing, at 17.1% in 2011, and the same figure is expected for this year. (Express Scripts notes that nearly half of specialty drug spend is reimbursed as a medical, not drug, benefit.)

With something of an eye to presenting its services in their best light, Express Scripts also analyzes what it calls “pharmacy related waste”—the cost of providing overall healthcare by what it considers to be the most efficient methods, versus existing practices. The total figure it calculates is $408 billion, including:

• Mix waste—forgone generic utilization or lack of step therapies and tiered copayments, $49.8 billion

• Channel waste—lower cost of drug delivery via mail and ancillary services, such as adherence monitoring, $96.3 billion

• Nonadherence—$317.4 billion, based on the finding that patients are at best 50% adherent to their therapy, with consequences for poorer health and higher healthcare costs.

The numbers don’t add up to $408 billion because of double-counting adherence costs in both nonadherence and channel waste, according to Express Scripts, which used the publication of the 2012 report to also highlight a new service, ScreenRx, which employs deep data analytics of patient histories to predict who will need additional services to maintain adherence (see here for background).

Express Scripts also uses the “channel waste” theme to both take a swipe at Walgreens, which opted out of providing pharmacy services to Express Scripts members, and the entire retail pharmacy system. “The positive reaction we received … confirmed what our prior analysis has shown: the vast majority of the US has an oversupply of pharmacies, suggesting that networks can be tightened significantly while maintaining sufficient patient access.” If nothing else, both Express Scripts’ focus on nonadherence, as well as the pharmacy community’s promotion of its personalized, face-to-face services, point to adherence (and resulting lower healthcare costs) being one of the key confrontations between retail pharmacy and PBMs in the future.

One other startling conclusion comes out of the Express Scripts analysis: on a per-capita basis, and employing the pharmacy-related waste figures as defined by the company, the entire Sun Belt—from North Carolina through California—has the highest per-capita waste; while the northern belt has a mix of middle-to-lowest per-capita waste—almost as if a line had been drawn across the country. It’s hard to say whether this is due to overall drug spend, or the breadth of Express Scripts members, or something else. Mississippi is the state with the single highest “waste” figure: $1,505; and Vermont is the state with the lowest: $893.